2013 INTERIM FINANCIAL REPORT

Transcription

1 2013 INTERIM FINANCIAL REPORT

2 CONTENTS INTERIM MANAGEMENT REPORT 1.1 SIGNIFICANT EVENTS OF THE FIRST HALF OF has taken legal action against Vivendi and Groupe Canal+ for the restitution of 1.6 billion in cash to Canal+ France Sale by of its stake in EADS NV Sale by the group of its 25% stake in the Amaury group, for an amount of 91.4 million Payment of an interim dividend Partial repurchase of the bond maturing in October MAIN RISKS AND UNCERTAINTIES FOR THE REM AINING SIX MONTHS OF THE YEAR 1.3 COMMENTS ON LAGARDÈR E SCA'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE F IRST HALF OF Income statement Consolidated statement of cash flows

3 1.4 RELATED PARTIES 1.5 EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE 1.6 UPDATE TO 2013 GUIDANCE 2 - CONSOLIDATED FINANCIAL STATEMENTS 3 - STATUTORY AUDITORS REPORT 4 - PERSONS RESPONSIBLE FOR THE INTERIM FINANCIAL REPORT DECLARATION BY THE MANAGING PARTNERS

4 INTERIM MANAGEMENT REPORT, a world-class pure-play media group, operates in around 30 countries and is structured around four distinct, complementary divisions: - Publishing: Book and e-publishing; - Active: Magazine Publishing, Audiovisual (Radio, Television, Audiovisual Production), Digital and Advertising Sales Brokerage; - Services: Travel Retail and Distribution; - Unlimited: Sport Industry and Entertainment. 1.1 SIGNIFICANT EVENTS OF THE FIRST HALF OF Any existing or significant link between these events and their impact on the financial statements is presented in section 1.3 below, or in Note 2 to the consolidated financial statements has taken legal action against Vivendi and Groupe Canal+ for the restitution of 1.6 billion in cash to Canal+ France In its capacity as a Canal+ France shareholder (20% interest), on 12 February 2013 summoned Vivendi and Groupe Canal+ (hereinafter "the Vivendi group") to appear in the Paris commercial court for the purposes of obtaining a restitution from the Vivendi group to Canal+ France of its cash, which amounted to close to 1.6 billion on 30 November This dispute is described in further detail in Note 20 to the consolidated financial statements for the six months ended 30 June Sale by of its stake in EADS NV On 2 April 2013, the new governance of EADS (as described in section A.3 of the Reference Document for 2012, the French version of which was filed with the French financial markets authority [Autorité des marchés financiers AMF] on 5 April 2013 [hereinafter the "Reference Document"]) came into effect and became the sole shareholder of Sogeade SCA, in accordance with the agreement signed on 5 December This transaction was carried out through the buyback by Sogeade SCA of its own shares held by Sogepa (representing approximately 66.67% of Sogeade SCA's capital), followed by the cancellation of these shares. At the same time, Sogeade SCA sold a number of EADS shares to Sogepa, corresponding, on a transparent basis, to the stake held until then by Sogepa in Sogeade SCA. On 8 April 2013, launched the sale of Sogeade SCA's remaining 7.4% stake in EADS by means of private placements through accelerated bookbuilding with qualified investors. On 12 April 2013, as part of this market transaction, finalised the sale by Sogeade SCA of its entire stake for a total amount of 2,283 million. EADS contributed 500 million to this purchase at the order book price of per share. Sogeade SCA was merged into SCA on 16 May

5 1.1.3 Sale by the group of its 25% stake in the Amaury group, for an amount of 91.4 million On 23 May 2013, the group sold its stake of nearly 25% in Les Éditions P. Amaury, the holding company of the Amaury group (media and organisation of sports events), for a total price of 91.4 million. This disposal took place via a capital reduction carried out by Les Éditions P. Amaury through the buyback of its own shares from the group Payment of an interim dividend On 31 May 2013, SCA paid an interim dividend of 9 per share (representing a total amount of 1,151 million), with an ex-dividend date of 28 May This interim dividend corresponds to the extra portion of the dividend which will be submitted for approval at the Annual General Meeting held in 2014 to approve the financial statements for the year ending 31 December In accordance with the applicable legal regulations, this dividend was paid on the basis of SCA's interim parent company financial statements which were prepared for this purpose by the Managing Partners and took into account the gain on the sale of the EADS shares Partial repurchase of the bond maturing in October 2014 On 31 May 2013, the group announced that it had proceeded with the partial repurchase of the bond maturing in October A total of 215 million was tendered in the offer made to bondholders. Together with the repurchase of 3 million by private agreement in January 2013, a total of 218 million was repurchased during the first half of 2013, reducing the amount maturing in 2014 to 657 million. As announced, the Group has used part of the proceeds from the disposal of its stake in EADS to reduce its debt. This partial bond repurchase also enhances the Group s liquidity profile. 1.2 MAIN RISKS AND UNCERTAINTIES FOR THE REM AINING SIX MONTHS OF THE YEAR A general presentation of these risks and uncertainties can be found in Chapter 3, "Risk factors", of the Reference Document containing the 2012 consolidated financial statements. Significant developments in disputes since the 2012 Reference Document was filed are set out, in particular, in Note 20 to the consolidated financial statements at 30 June

6 1.3 COMMENTS ON LAGARDÈR E SCA' S CONSOLIDATED FINAN CIAL STATEMENTS FOR THE F IRST HALF OF 2013 's main businesses are carried out through Media, which includes the divisions Publishing, Active, Services and Unlimited. In addition, the Group holds a 20% interest in Canal+ France and carries out business through "Other Activities", corresponding to activities not directly related to Media's operating divisions. The main changes in the scope of consolidation during the first half of 2013 are described in Note 2 to the consolidated financial statements Income statement Income statement First-half 2013 First-half 2012 Full-year 2012 Net sales 3,406 3,389 7,370 Recurring operating profit before associates(*) Income (loss) from associates(**) (2) Non-recurring/non-operating items 1,489 (39) (216) Profit before finance costs and tax 1, Finance costs, net (55) (40) (82) Income tax expense (46) (24) (40) Profit for the period 1, Attributable to: - Owners of the Parent - Minority interests 1, (*) Recurring operating profit before associates corresponds to profit before finance costs and tax excluding the following income statement items: Income (loss) from associates; Gains (losses) on disposals of assets; Impairment losses on goodwill, property, plant and equipment and intangible assets; Restructuring costs; Items related to business combinations: - Acquisition-related expenses, - Gains and losses resulting from purchase price adjustments, - Amortisation of acquisition-related intangible assets. (**) Before impairment losses. 6

7 During the first half of 2013, the group confirmed its resilience, with a stable performance based on a constant Group structure and exchange rates (like-for-like) and net sales of 3,406 million. General Literature, Audiovisual Production and Duty Free posted strong results, despite the persistently tough economic environment in Europe and the acceleration of the decline in print-media sales. The difference between reported and like-for-like figures is partly attributable to a 40 million positive impact of changes in Group structure relating mainly to acquisitions carried out by Services and Active in 2012 (in particular, Rome airports, LeGuide.com and BilletRéduc.com), which were partially offset by the sale of OLF (book distribution business in Switzerland) and the impact of changing a telephone contract in Hungary to a commissionbased agreement (with no impact on profit or loss). Changes in exchange rates (average rate over the period) had a negative 24 million impact on net sales (mainly for Publishing, due to the depreciation of the pound sterling and the yen against the euro). Publishing's net sales advanced 3.1% on a like-for-like basis, coming in at 917 million thanks to a sparkling performance from General Literature in both France and the United States. Sales of digital books continued to rise and accounted for 11.4% of the division's net sales, compared to 8.4% in the first half of This outstanding performance continued to be concentrated in English-speaking countries, with e-books representing 31% of total adult trade net sales in the United Kingdom (versus 22% in the same prior-year period) and 34% of sales in the United States (versus 27%). In France, the division's net sales increased thanks to a solid performance from General Literature which benefited from the publication of the last two volumes of E L James' novel and of Dan Brown's latest novel, Inferno. The Distribution business also benefited from this success. These results were partly countered by a decline in Illustrated Books (which suffered from an unfavourable basis of comparison following an excellent performance in the first half of 2012) and in Education (which will not benefit this year from middle-school reforms). Net sales also grew in the United States, driven by a host of new titles and boosted by the release of several films based on novels published by the Group, such as Safe Haven by Nicholas Sparks and Beautiful Creatures by K. Garcia and M. Stohl. Despite a string of commercial successes, net sales in the United Kingdom slipped slightly due to persistently tough international markets in Australia and New Zealand. The economic crisis continued to take its toll on operations in Spain and, without the benefit of education reforms this year, the country's net sales are in decline. Business was brisk for Partworks, with publishing successes in the United Kingdom and Russia. In the first half of 2013, Active's business was strongly impacted by changes in Group structure (positive impact of 20 million), due notably to the acquisitions of LeGuide.com and BilletRéduc.com during the second half of Net sales edged up 0.3% to 471 million on a like-for-like basis. As expected, Audiovisual Production surged 43% in the first half of the year with a number of important deliveries both in terms of programme archives (Clem, L Odyssée, Borgia 2, Jo, etc.) and immediate broadcasts (Si près de chez vous). However, this performance is not expected to be extrapolated to the full year. Television channel business activity also increased (up 5%), with strong results recorded outside of France. However, Active was affected by a contracting advertising market, with net sales from advertising operations down 6%. The sales decline was particularly sharp for magazines (down 9%). Nevertheless, radio confirmed its status as a defensive medium, with Europe 1 in particular posting strong growth during the period. In the first half of 2013, the division suffered from the ongoing decline in magazine circulation which slumped 7.6%, hit by lower consumption and interruptions to distribution at news stands. 7

8 Services delivered 1,814 million in net sales in the first half of 2013, edging down 0.4% on a reported basis and 0.8% like-for-like. The momentum in Travel Retail (up 2% on a like-for-like basis) continued to boost the division's performance during the period. The Travel Retail business saw bullish growth at Aelia, which grew by close to 3%, and in Central Europe (a rise of 12% in Romania and 4% in Poland). Asia-Pacific delivered strong 6% net sales growth (including 25% in Asia) on the back of network development. Distribution retreated 4.5% on a like-for-like basis due to the sharp drop in the market for printed products (press and books). Unlimited reported net sales of 204 million, down 4.6% on a reported basis and 7.1% like-for-like. The difference between reported and like-for-like figures is primarily attributable to a positive 6 million impact from changes in Group structure following the acquisition of SMAM in Australia (sports marketing consultancy) and Zaechel in Germany (hospitality services) in The decrease in net sales was mainly attributable to World Sport Group and was essentially due to the absence of qualifying matches in 2013 for the Olympic Games and the transformation of the Asian Football Cup (AFC) contract from a buy-out arrangement to a commission-based agreement, which reduced the amount of net sales recognised without impacting gross margin. However, Sportfive posted excellent results in the first half of the year thanks to a favourable calendar with European qualifying matches for the 2014 FIFA World Cup, the strong performance of the Africa Cup of Nations and robust growth in marketing activities for German football clubs (in particular Borussia Dortmund and Bayer Leverkusen). Recurring operating profit before associates for Media amounted to 138 million, up 26 million from first-half 2012 ( 112 million). Movements can by analysed as follows for each division: Publishing reported a 14 million year-on-year rise in recurring operating profit before associates, at 71 million. This growth reflects the strong performance of General Literature, driven by bestsellers in France and the United States, and strong resilience in Partworks in the United Kingdom and Russia. Active posted a 2 million increase in recurring operating profit before associates, which came in at 33 million in the first half of The drop in net sales from advertising and circulation (see above) was offset during the period by the contributions of recent digital acquisitions, an improved performance in Television and the impact of ongoing cost-cutting plans. Recurring operating profit before associates for Services decreased 8 million on the same prior-year period to 29 million as a result of the decline in the performance of Distribution (reflecting the aforementioned drop in the market) which was mitigated by a strict control of costs. Recurring operating profit before associates for Travel Retail retreated slightly due to the decrease in Relay press sales, despite a shift in product mix towards products with higher margins. Unlimited reported recurring operating profit before associates of 5 million, compared with a loss of 13 million in the same prior-year period. In the first half of 2012 this item included a non-recurring 22 million contingency provision relating to the International Olympic Committee (IOC) contract (sale of media rights in Europe for the 2014 Winter Olympics and the 2016 Summer Olympics). Besides this, the first half of 2013 benefited from the good performance in the sale of German clubs' marketing rights, the impact of which was mitigated by an unfavourable calendar at World Sport Group, as described above (absence of qualifying matches for the Olympic Games). Other Activities reported a recurring operating loss before associates of 33 million including a provision in the amount of 15 million for the special bonus granted by the Managing Partners following the sale of EADS shares. This bonus will be paid to all of the Group's employees during the second half of For employees in France, this bonus falls within the scope of the law of July 2011 which instituted a profit-sharing bonus for employees of a group in the event of an increase in dividends paid to its shareholders by the entity controlling the group. Other Activities was also impacted by losses from Matra Manufacturing & Services and by costs incurred with respect to Canal+ France. In the first half of 2012, Other Activities recorded a recurring operating loss of 6 million. 8

9 The loss from associates (before impairment losses) came in at 2 million in the first half of 2013, compared to income of 45 million in the same prior-year period, due to the sale of the stake in EADS which contributed 42 million in the first half of The contribution of equity investments in the Media segment decreased 5 million versus the first half of 2012 as a result of weaker performances from the Marie Claire group and Gulli. Non-recurring/non-operating items included in profit before finance costs and tax represented net profit of 1,489 million in the first half of 2013, mainly comprising: 1,810 million net of expenses in gains and losses, including the 1,823 million gain generated on the sale of the stake in EADS; 249 million in impairment losses taken against intangible assets, including 209 million recorded by Active, mainly relating to its Magazine Publishing assets. These impairment losses reflect the downward revision of the estimated future cash flows to be generated from these businesses and the reduction of the perpetuity growth rate for Magazine Publishing from 1.5% at the end of 2012 to 0%. Services' Press Distribution business in Switzerland, which was affected in the same way by the structural decline in the press distribution market, also incurred impairment losses in the amount of 30 million; 35 million in impairment losses taken against the interest held in the Marie Claire group, recognised based on an external valuation carried out by a financial institution and which, like Active's magazine business, takes into account the worsening economic environment in the press market; 14 million in restructuring costs, including 8 million incurred by Active for the ongoing rollout of its cost-cutting plans, with the balance broken down between the three other divisions; 12 million in amortisation of intangible assets and acquisition-related expenses for consolidated companies, including 7 million for Services and 4 million for Unlimited. In the first half of 2012, non-recurring/non-operating items included in profit before finance costs and tax represented a net expense of 39 million, breaking down as 9 million in impairment losses taken against property, plant and equipment and intangible assets, in particular within Active with respect to a building in Italy, 16 million in amortisation of acquisitionrelated intangible assets and other expenses and 14 million in restructuring costs. As a result of the above items, consolidated profit before finance costs and tax for the first half of 2013 totalled 1,592 million, up 1,480 million on the prior-year period. Net finance costs increased 15 million year-on-year to 55 million, mainly as a result of expenses relating to the partial repurchase of the bond maturing in In the first half of 2013, income tax expense amounted to 46 million and mainly comprised: - the 3% additional contribution instituted in France on dividends paid, corresponding to 40 million; - a 31 million benefit corresponding to the reversal of a deferred tax liability relating to the impairment of publication titles for the Magazine Publishing business. Profit attributable to minority interests came in at 8 million in the first half of 2013 compared to 12 million in the first half of

10 1.3.2 Consolidated statement of cash flows Cash flows First-half 2013 First-half 2012 Full-year 2012 Cash flows from operations before changes in working capital Changes in working capital (91) (191) (21) Cash flows from operations Interest paid and received, and income taxes paid(*) (98) (44) (140) Net cash from (used in) operating activities (11) Cash used in investing activities (210) (210) (648) Purchases of intangible assets and property, plant and equipment (163) (103) (264) Purchases of investments and other non-current assets (47) (107) (384) Proceeds from disposals of non-current assets 2, Intangible assets and property, plant and equipment Investments and other non-current assets 2, Decrease in short-term investments Net cash from (used in) investing activities 2,186 (180) (535) Total cash from (used in) operating and investing activities 2,175 (178) (144) Net cash from (used in) financing activities (2,237) Other movements (8) 7 (13) Change in cash and cash equivalents (70) (128) 5 (*) Including, in first-half 2013, 40 million in tax on dividends paid 10

11 Cash from (used in) operating and investing activities Cash flows from operations before changes in working capital totalled 178 million in the first half of 2013, versus 237 million in the first half of This decrease reflects the impact of the decrease in depreciation, amortisation and provisions (a non-recurring 22 million contingency provision relating to the IOC contract was recognised in the financial statements at 30 June 2012) as well as the decrease in dividends received from associates (in particular EADS, which paid dividends of 28 million in 2012). Changes in working capital, while generally negative at the end of June, improved significantly during the first six months of the year, representing an outflow of 91 million compared to 191 million in the first half of This is largely due to the marked improvement in this item for Unlimited, owing to amounts collected on Sportfive International s IOC contract, and a favourable trend for Publishing, as a result of lower advances paid to writers in the United States. These impacts were nevertheless partially offset by a negative trend in this item reported by Active, whose audiovisual production business made significant deliveries in early 2013 which were recognised as trade receivables at 30 June Interest paid (net of interest received) stood at 28 million versus 12 million in the first half of This year this item includes costs relating to the partial repurchase of the bond maturing in October Income taxes paid totalled 70 million (including an additional contribution of 40 million for dividends paid) compared with 32 million in the same prior-year period. In view of all of these items, operating activities represented a net outflow of 11 million in the first half of 2013 compared to a net inflow of 2 million one year earlier. Purchases of property, plant and equipment and intangible assets totalled 163 million in the first half of 2013, up 60 million on the same prior-year period, and chiefly concerned both in terms of absolute values and year-on-year changes Services (sales outlet refurbishments following the development of Travel Retail) and Unlimited (acquisition of sports rights). Purchases of investments amounted to 47 million and related mainly to various small-scale acquisitions within Publishing (Galore Park, education business in the United Kingdom) and Services (distribution companies in Hungary), as well as the payment of security deposits relating to the AFC contract (World Sport Group) within Unlimited. Proceeds from disposals of property, plant and equipment and intangible assets amounted to 1 million in first-half Proceeds from disposals of investments and other non-current assets came to 2,381 million and mainly concerned the sale of the stake held in EADS for 2,272 million net of expenses and of the 25% stake in the Amaury group for 91 million. As a result, operating and investing activities represented a net inflow of 2,175 million in the first half of 2013, compared to a net outflow of 178 million in first-half This change is mainly attributable to the cash generated during the period through the sale of EADS and Amaury (see above). 11

12 Cash from (used in) financing activities In the first half of 2013, net cash used in financing activities came to 2,237 million, primarily reflecting: - 1,332 million in dividends paid, of which 1,318 million by SCA. This amount includes an extra dividend of 1,151 million following the sale of the stake held in EADS and corresponding to an interim dividend which will be submitted for approval at the Annual General Meeting of shareholders held in 2014 to approve the financial statements for the year ending 31 December 2013; million in repayments of borrowings, chiefly including 218 million for the partial repurchase of the bond maturing in 2014, 666 million for the full repayment of the 2011 syndicated loan and a 19 million decrease in the securitisation of trade receivables within Active; - 1 million in purchases of treasury shares Net debt Net debt breaks down as follows: 30 June Dec Short-term investments and cash and cash equivalents Non-current debt (1,282) (2,165) Current debt (245) (238) Net debt (900) (1,700) Changes in net debt during the first half of 2013 and the first half of 2012 were as follows: Net debt at 1 January (1,700) (1,269) Total cash from (used in) operating and investing activities 2,175 (178) Acquisitions of minority interests - (56) Dividends (1,332) (190) Decrease in short-term investments (14) (10) Effect on cash of changes in exchange rates, changes in consolidation scope and other (29) (26) Net debt at 30 June (900) (1,729) 12

13 1.4 RELATED PARTIES See Note 21 to the consolidated financial statements. 1.5 EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE None. 1.6 UPDATE TO 2013 GUIDANC E The strong performance at Publishing and Active (Audiovisual Production) cannot be extrapolated to the whole year. Over the 2 nd half, Publishing will face a difficult comparison effect (strong activity in the 2 nd half 2012), especially due to the expected slowdown in Education. However, thanks to the first-half results and the outlook for the second half of the year, the guidance announced in March for full-year recurring Media EBIT is maintained. In 2013, recurring Media EBIT should increase by between 0% and 5% relative to 2012, at constant exchange rates. This guidance is based on an expected decline in advertising revenue of around 7% at Active. * * * 13

14 2 - CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED INCOME STATEMENT FOR THE PERIOD ENDED 30 JUNE 2013 (in millions of euros) First-half 2013 First-half 2012 Full-year 2012 Net sales (Notes 3 and 4) 3,406 3,389 7,370 Other income from ordinary activities Revenues 3,567 3,565 7,722 Purchases and changes in inventories (1,697) (1,696) (3,629) Capitalised production Production transferred to inventories External charges (962) (961) (2,132) Payroll costs (772) (740) (1,531) Depreciation and amortisation other than on acquisition-related intangible assets (94) (109) (220) Amortisation of acquisition-related intangible assets and other acquisition-related expenses (12) (16) (35) Restructuring costs (Note 5) (14) (14) (40) Gains (losses) on disposals of assets and associated risks (Note 6) 1,810 - (3) Impairment losses on goodwill, property, plant and equipment and intangible assets (Note 7) (249) (9) (94) Other operating expenses (Note 8) (17) (24) (44) Other operating income (Note 9) Income (loss) from associates (Note 13) (47) PROFIT BEFORE FINANCE COSTS AND TAX (Note 3) 1, Financial income (Note 10) Financial expenses (Note 10) (60) (45) (93) PROFIT BEFORE TAX 1, Income tax expense (Note 11) (46) (24) (40) PROFIT FOR THE PERIOD 1, Attributable to: Owners of the Parent 1, Minority interests Earnings per share - Attributable to owners of the Parent: Basic earnings per share (Note 12) Diluted earnings per share (Note 12)

15 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED 30 JUNE 2013 (in millions of euros) First-half 2013 First-half 2012 Full-year 2012 Profit for the period 1, Actuarial gains and losses on pensions and other post-employment benefit obligations 0 (20) (25) Tax relating to actuarial gains and losses on pensions and other post-employment benefit obligations Other comprehensive income (expense) for the period, net of tax, that will not be reclassified to profit or loss 0 (14) (18) Currency translation adjustments (33) 36 9 Change in fair value of derivative financial instruments: 1 0 (1) Unrealised gains and losses recognised directly in equity Amounts reclassified from equity to profit (1) (2) Change in fair value of investments in non-consolidated companies: (2) (1) 0 Unrealised gains and losses recognised directly in equity (2) (1) Amounts reclassified from equity to profit Share of other comprehensive income (expense) of associates (net of tax)(*) 9 (113) 48 Unrealised gains and losses recognised directly in equity (113) 48 Amounts reclassified from equity to profit 9 Translation adjustments (70) Valuation reserve 79 Tax relating to components of other comprehensive income (expense) recognised in equity Other comprehensive income (expense) for the period, net of tax, that may be reclassified subsequently to profit or loss (25) (78) 56 Other comprehensive income (expense) for the period, net of tax (25) (92) 38 Total comprehensive income (expense) for the period 1,466 (44) 144 Attributable to: Owners of the Parent 1,458 (57) 126 Minority interests (*) Only concerns the EADS group. 15

16 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED 30 JUNE 2013 (in millions of euros) First-half 2013 First-half 2012 Full-year 2012 Profit for the period Income tax expense Finance costs, net 1, Profit before finance costs and tax 1, Depreciation and amortisation expense Impairment losses, provision expense and other non-cash items (Gains) losses on disposals of assets (1,810) - 3 Dividends received from associates (Income) loss from associates 47 (45) (61) Changes in working capital (91) (191) (21) Cash flows from operations Interest paid (30) (17) (87) Interest received Income taxes paid(*) (70) (32) (64) Net cash from (used in) operating activities (A) (11) Cash used in investing activities Purchases of intangible assets and property, plant and equipment (163) (103) (264) Purchases of investments (19) (102) (412) Cash acquired through acquisitions Purchases of other non-current assets (28) (15) (25) Total cash used in investing activities (B) (210) (210) (648) Cash from investing activities Proceeds from disposals of non-current assets Intangible assets and property, plant and equipment Investments 2, Cash transferred on disposals (1) - 0 Decrease in other non-current assets Total cash from investing activities (C) 2, Decrease in short-term investments (D) Net cash from (used in) investing activities (E) = (B)+(C)+(D) 2,186 (180) (535) Total cash from (used in) operating and investing activities (F) = (A)+(E) 2,175 (178) (144) Capital transactions Proceeds from capital increase by the Parent Minority interests' share in capital increases by subsidiaries (Acquisitions) disposals of treasury shares (1) 1 2 (Acquisitions) disposals of minority interests - (56) (64) Dividends paid to owners of the Parent(**) (1,318) (166) (166) Dividends paid to minority shareholders of subsidiaries (14) (24) (26) Financing transactions Increase in debt Decrease in debt (909) (53) (321) Net cash from (used in) financing activities (G) (2,237) Other movements Effect on cash of changes in exchange rates (8) 7 (1) Effect on cash of other movements - - (12) Total other movements (H) (8) 7 (13) Change in cash and cash equivalents (I) = (F)+(G)+(H) (70) (128) 5 Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period (Note 15) (*) Including, in first-half 2013, 40 million in tax on dividends paid (**) Including the portion of profit for the period paid to the General Partners. 16

17 CONSOLIDATED BALANCE SHEET AT 30 JUNE 2013 ASSETS (in millions of euros) 30 June Dec Intangible assets Goodwill Property, plant and equipment 939 1, ,016 1, Investments in associates (Note 13) 1,303 1,451 Other non-current assets Deferred tax assets Total non-current assets 4,991 5,373 Inventories Trade receivables 1,151 1,255 Other current assets 1,204 1,011 Short-term investments (Note 14) Cash and cash equivalents (Note 15) Total current assets 3,586 3,550 Assets held for sale (Note 18) Total assets 8,577 9,360 17

18 CONSOLIDATED BALANCE SHEET AT 30 JUNE 2013 EQUITY AND LIABILITIES (in millions of euros) 30 June Dec Share capital Reserves 770 2,020 Profit attributable to owners of the Parent 1, Equity attributable to owners of the Parent 3,053 2,909 Minority interests Total equity 3,130 2,991 Provisions for pensions and other post-employment benefit obligations Non-current provisions for contingencies and losses Non-current debt (Note 16) 1,282 2,165 Other non-current liabilities Deferred tax liabilities Total non-current liabilities 1,968 2,835 Current provisions for contingencies and losses Current debt (Note 16) Trade payables 1,521 1,651 Other current liabilities 1,446 1,352 Total current liabilities 3,479 3,534 Liabilities associated with assets held for sale - - Total equity and liabilities 8,577 9,360 18

19 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (in millions of euros) Share capital Share premiums Other reserves Treasury shares Translation reserve Valuation reserve Equity attributable to owners of the Parent Minority interests Total equity At 1 January ,631 (193) (35) (134) 2, ,024 Profit for the period Other comprehensive income (expense) for the period (a) (64) 40 (69) (93) 1 (92) Total comprehensive income (expense) for the period (28) 40 (69) (57) 13 (44) Dividends paid (166) (166) (24) (190) Minority interests' share in capital increases 0 0 Changes in treasury shares Share-based payments Effect of transactions with minority interests Changes in consolidation scope and other 0 0 At 30 June ,444 (192) 5 (203) 2, ,800 At 1 January ,431 (179) 60 (73) 2, ,991 Profit for the period 1,483 1, ,491 Other comprehensive income (expense) for the period (a) (103) 78 (25) (25) Total comprehensive income (expense) for the period 1,483 (103) 78 1, ,466 Dividends paid (1,318) (1,318) (14) (1,332) Parent company capital reduction (b) (2) Minority interests' share in capital increases 0 0 Changes in treasury shares (1) (1) (1) Share-based payments Effect of transactions with minority interests 0 0 Changes in consolidation scope and other At 30 June ,601 (178) (43) 5 3, ,130 (a) See Note 17 to the consolidated financial statements. (b) Capital reduction carried out by cancelling treasury shares. 19

20 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2013 (All figures are expressed in millions of euros unless otherwise specified) Note 1 Accounting principles The interim consolidated financial statements at 30 June 2013 have been prepared in compliance with IAS 34 Interim Financial Reporting. The accompanying notes do not contain all the disclosures required for annual financial statements. These condensed financial statements should therefore be read in conjunction with the annual consolidated financial statements published for The Group applies the new standards and amendments to IFRSs adopted by the European Union that are effective for periods beginning on or after 1 January 2013, of which the most important is the amendment to IAS 19 relating to employee benefits. This amendment eliminates, in particular, the corridor method which deferred the recognition of actuarial gains and losses when their amount, calculated on a plan-by-plan basis, did not exceed 10% of the value of the obligation or of the fair value of any plan assets. Actuarial gains and losses are now immediately recognised in other comprehensive income. The Group is not impacted by this change as it opted to adopt the new recognition method as of 1 January The other main changes introduced by the amended IAS 19 are as follows: the use of the expected rate of return on assets to record the income generated on defined benefit plan assets has been eliminated. As of 1 January 2013, it has been replaced by the discount rate which is used to calculate post-employment benefit obligations; plan amendments (unvested past service costs) are now immediately recognised in profit or loss having been previously recognised over the vesting period; certain new taxes are taken into account in the calculation of obligations. The changes introduced by IAS 19 and various other standards and amendments applicable as of 1 January 2013 did not have a material impact on the consolidated financial statements for the six months ended 30 June Note 2 Main changes in the scope of consolidation During the first half of 2013, there were no significant changes in the scope of fully-consolidated subsidiaries. The main changes in the scope of consolidation since 30 June 2012 are as follows: Active Full consolidation of the LeGuide.com group since 1 July Full consolidation of BilletRéduc.com since 1 January 2013 (as it was acquired in late 2012, only the balance sheet was consolidated at 31 December 2012). Services Full consolidation of AdR Retail, a duty free/duty paid concession operator in Rome's two airports since 1 October Deconsolidation of the Swiss book retailer OLF (consolidated in first-half 2012) with effect from 1 October 2012 following its sale. In addition, during the first half of 2013 the Group sold all of its equity-accounted interests in the EADS and Amaury groups. EADS On 12 April 2013, sold its entire 7.4% stake in the EADS group by means of a private placement with qualified investors. EADS participated in this placement for a total amount of 500 million. The sale was carried out at per share for a total amount of 2,283 million, generating a gain of 1,823 million, net of expenses. At 31 December 2012, the interest had been reclassified in assets held for sale. No contributions from EADS were recognised in the financial statements for the six months ended 30 June

21 Amaury On 23 May 2013, Active sold its 25% stake in the Amaury group (media and organisation of sports events), for a total price of 91.4 million. This disposal took place via a capital reduction carried out by Les Éditions P. Amaury through the buyback of its own shares. This generated a loss (expenses included) of 9 million. Note 3 Segment information 's main businesses are carried out through Media, which comprises the following divisions: Publishing: publication of works in the General Literature, Education, Illustrated Books and Partworks markets; Active, which comprises: - Audiovisual and Digital businesses including special interest television channels, Audiovisual Production and Distribution, Radio and Advertising Sales Brokerage, - Press activities, principally mainstream Magazine Publishing; Services: Travel Retail and Distribution; Unlimited, which specialises in the Sport Industry and Entertainment: management of broadcasting rights; marketing of sports rights and associated products; organisation and management of events; consulting in the management and operation of stadiums and sports grounds; talent representation; management of sports academies. At 30 June 2013, the Group also held a 20% interest in the Canal+ France group which is no longer included within the scope of Media. In addition to the above divisions, the Group has a corporate reporting unit ( Other Activities ) used primarily to report the effect of financing obtained by the Group, the net operating costs of Group holding companies, and the activities of Matra Manufacturing & Services (whose revenues are reported under Other income from ordinary activities ). Transactions between business divisions are generally carried out on arm's length terms. 21

22 Income statement for first-half 2013 Publishing Active Services Unlimited Media EADS and Other Activities (*) Total Net sales , ,422-3,422 Inter-segment sales (14) (2) - - (16) - (16) Consolidated net sales , ,406-3,406 Recurring operating profit (loss) before associates (33) 105 Income (loss) from associates before impairment losses and amortisation of acquisitionrelated intangible assets 1 (5) 2 - (2) - (2) Recurring operating profit (loss) (33) 103 Restructuring costs (1) (8) (2) (3) (14) - (14) Gains (losses) on disposals of assets and associated risks - (11) (2) - (13) 1,823 1,810 Impairment losses(**) (10) (254) (30) - (294) - (294) Fully consolidated companies (10) (209) (30) - (249) - (249) Companies accounted for by the equity method - (45) - - (45) - (45) Amortisation of intangible assets (1) - (7) (4) (12) - (12) Acquisition-related expenses Purchase price adjustments (beyond one year deadline) - (1) - - (1) - (1) Profit (loss) before finance costs and tax(*) 60 (246) (10) (2) (198) 1,790 1,592 Finance costs, net (1) (2) (7) (5) (15) (40) (55) Profit (loss) before tax(*) 59 (248) (17) (7) (213) 1,750 1,537 Items included in recurring operating profit (loss) Depreciation and amortisation of intangible assets and property, plant and equipment (12) (6) (33) (39) (90) (4) (94) Cost of stock option plans (1) (2) (1) - (4) (1) (5) (*) Including a 1,823 million gain on the sale of the stake in EADS. (**) Impairment losses on goodwill, property, plant and equipment and intangible assets. 22

23 Income statement for first-half 2012 Publishing Active Services Unlimited Media EADS and Other Activities (*) Total Net sales , ,406-3,406 Inter-segment sales (15) (1) (1) (17) - (17) Consolidated net sales , ,389-3,389 Recurring operating profit (loss) before associates (13) 112 (6) 106 Income (loss) from associates before impairment losses and amortisation of acquisitionrelated intangible assets 1 (1) Recurring operating profit (loss) (12) Restructuring costs - (11) (2) (1) (14) - (14) Gains (losses) on disposals of assets and associated risks 1 - (1) Impairment losses(**) - (9) - - (9) - (9) Fully consolidated companies - (9) - - (9) - (9) Companies accounted for by the equity method Amortisation of intangible assets (1) - (5) (6) (12) - (12) Acquisition-related expenses - (2) (1) (1) (4) - (4) Profit (loss) before finance costs and tax(*) (20) Finance costs, net - (3) (2) (6) (11) (29) (40) Profit (loss) before tax(*) (26) Items included in recurring operating profit (loss) Depreciation and amortisation of intangible assets and property, plant and equipment (11) (7) (31) (56) (105) (4) (109) Cost of stock option plans (1) (2) (1) - (4) (1) (5) (*) Including EADS: 42 million in income from associates. (**) Impairment losses on goodwill, property, plant and equipment and intangible assets. 23

24 Statement of cash flows for first-half 2013 Publishing Active Services Unlimited Media EADS, Other Activities and eliminations Total Cash flows from (used in) operations (18) (14) 87 Interest paid and received, and income taxes paid (28) (27) (13) (3) (71) (27) (98) Net cash from (used in) operating activities (46) (20) (1) (41) (11) Cash used in investing activities (18) (11) (71) (104) (204) (6) (210) - Purchases of intangible assets and property, plant and equipment (13) (7) (65) (76) (161) (2) (163) - Purchases of investments and other non-current assets (5) (4) (6) (28) (43) (4) (47) Proceeds from disposals of non-current assets ,273 2,382 - Intangible assets and property, plant and equipment Investments and other non-current assets ,273 2,381 Decrease in short-term investments Net cash from (used in) investing activities (18) 87 (56) (94) (81) 2,267 2,186 Total cash from (used in) operating and investing activities (64) 67 (57) 3 (51) 2,226 2,175 24

25 Statement of cash flows for first-half 2012 Publishing Active Services Unlimited Media EADS, Other Activities and eliminations Total Cash flows from (used in) operations (74) Interest paid and received, and income taxes paid (17) (39) (15) (8) (79) 35 (44) Net cash from (used in) operating activities (91) 13 (10) 41 (47) 49 2 Cash used in investing activities (15) (73) (55) (65) (208) (2) (210) - Purchases of intangible assets and property, plant and equipment (11) (5) (42) (43) (101) (2) (103) - Purchases of investments and other non-current assets (4) (68) (13) (22) (107) - (107) Proceeds from disposals of non-current assets Intangible assets and property, plant and equipment Investments and other non-current assets Decrease in short-term investments Net cash from (used in) investing activities (15) (57) (41) (65) (178) (2) (180) Total cash from (used in) operating and investing activities (106) (44) (51) (24) (225) 47 (178) 25

26 Balance sheet at 30 June 2013 Publishing Active Services Unlimited Media EADS, Other Activities and eliminations Total Segment assets 2,149 1,497 1, , ,647 Investments in associates ,154 1,303 Segment liabilities (1,025) (980) (1,088) (668) (3,761) (159) (3,920) Capital employed 1, ,613 1,417 4,030 Net debt (900) Equity 3,130 Balance sheet at 31 December 2012 Publishing Active Services Unlimited Media EADS, Other Activities and eliminations Total Segment assets 2,194 1,735 1, , ,769 Investments in associates ,154 1,451 Segment liabilities (1,155) (1,064) (1,128) (625) (3,972) 6 (3,966) Capital employed 1, ,797 1,457 4,254 Assets held for sale and associated liabilities 437 Net debt (1,700) Equity 2,991 26

27 Note 4 Net sales 30 June June 2012 France 1,233 1,237 Other countries 2,173 2,152 Total 3,406 3,389 Like-for-like net sales were calculated by adjusting: first-half 2013 net sales to exclude companies consolidated for the first time during the period, and first-half 2012 net sales to exclude companies divested in 2013; first-half 2012 and first-half 2013 net sales based on first-half 2012 exchange rates. Excluding the effect of changes in Group structure (+1.2%) and exchange rates (-0.7%), total net sales remained stable compared to first-half Note 5 Restructuring costs Restructuring costs for the first half of 2013 totalled 14 million, including 8 million incurred by Active, mainly as part of the ongoing cost streamlining programme, with the remaining amount mainly divided between Services ( 2 million) and Unlimited ( 3 million). For the first half of 2012, restructuring costs amounted to 14 million and mainly concerned Active ( 11 million) and Services ( 2 million). Note 6 Gains (losses) on disposals of assets In the first half of 2013, this item represented a net gain of 1,810 million which mainly included: a 1,823 million gain on the sale of the Group's EADS shares; a 9 million loss on the sale of the Group's Amaury shares. These two transactions are described in Note 2 (see above) which sets out the changes in the scope of consolidation during the first half of Note 7 Impairment losses on goodwill, property, plant and equipment and intangible assets At 30 June 2013, impairment tests were only performed on assets for which an indication of impairment had been identified at that date. During the first half of 2013, the Magazine Publishing business contracted significantly compared with the previous year and underperformed the assumptions set out in the budgets prepared at end-2012 on which the impairment tests carried out for the 2012 consolidated financial statements were based. This shows that the decline in the press market is not only attributable to the economic uncertainty observed in 2012, but is also largely structural. This observation constitutes an indication of impairment for the cash-generating units (CGUs) that generate revenues from this business, i.e., Active's Magazine Publishing and Services' Press Distribution businesses. 27

28 At 30 June 2013, the fair value of these CGUs was measured based on new budget plans in which the future cash flows had been revised downwards. Perpetuity growth rates, which had been set at end at 1.5% and 2% for Magazine Publishing and Services' Distribution business, respectively, were reduced to 0%. The discount rates applied to these flows were identical to those used for the 2012 consolidated financial statements. These rates will be reviewed at the next yearend. At 30 June 2013, the Group had not identified any factors that are likely to significantly impact these rates. This led to the recognition of impairment losses totalling 234 million, of which 204 million corresponding to the assets of Active's Magazine Publishing business and 30 million to the subsidiary Payot Naville, Services' Distribution business in Switzerland. The other impairment losses recognised at 30 June 2013 with respect to consolidated entities totalled 15 million and included: goodwill with respect to Publishing's Spanish subsidiary Salvat (Partworks in Spain and Latin America) in the amount of 10 million. At 31 December 2012, a 5 million impairment loss had been recognised to take into account the decline in the subsidiary's net sales, reflecting the contraction in the partworks market in Spain. The forecast budget prepared at end-2012 was based on stable net sales for subsequent years. In 2013, the revised forecasts took into account the continued decline in the Spanish partworks market and the subsidiary's difficulties in exporting to Latin America, and in particular to Argentina; goodwill with respect to Active's digital subsidiary Newsweb in the amount of 5 million. The business plan was revised downwards following worse-than-expected performance in first-half The other assets that were written down at 31 December 2012 were valued based on the post-tax discount rates used at that date, as set out in Note 10 to the 2012 consolidated financial statements. Note 8 Other operating expenses First-half 2013 First-half 2012 Write-downs of assets (11) (18) Provisions for contingencies and losses - (1) Foreign exchange losses (1) - Financial expenses other than interest (1) (1) Other expenses (4) (4) Total (17) (24) Write-downs of assets totalled 10 million in first-half 2013 ( 18 million in first-half 2012) and principally related to advances paid to writers by Publishing. 28